March 7, 2022

Should You Invest in Custom Software?

Contractors are regularly urged to buy the latest and greatest high-tech solutions, but no software tool is perfect. Off-the-shelf products don’t always provide the specific functionality needed or “play well” with other systems, forcing employees to engage in redundant and potentially error-ridden practices.

All this hassle might lead some contractors to consider engaging an outside firm to help them develop a customized solution. It’s an exciting idea, though a potentially costly one as well. If you’re thinking about building your own software, here are a few factors to consider:

Budget and time. Obviously, off-the-shelf products are cheaper and faster to implement. Creating custom software will likely entail substantial upfront costs and call for a significant allocation of time and resources. (Note: You might be able to recoup some of the dollars allocated to the effort by qualifying for and claiming the research tax credit.)

Even if an outside firm handles the coding, you’ll still have to explain your needs and involve yourself in the development, testing and roll out. That could take months or even years. So, you must really want the end product.

Specialized needs. When standard software can’t be tailored to meet a company’s distinctive needs, employees must find a way. Workarounds may involve resorting to additional spreadsheets or tedious manual processes — activities the software is supposed to eliminate! This could result in bad data and, for contractors, costly mistakes on the job.

Having technology specially designed for your construction company should markedly eliminate inefficiencies and measurably increase productivity. If it doesn’t, you probably shouldn’t undertake the effort.

Integration. Thanks to cloud-based computing and application programming interfaces, most off-the-shelf software can be integrated with existing systems. Nevertheless, if your business is still having problems with data integration, developing a custom solution that optimally interacts with your systems might be worth the price of admission.

User support. Most of the better software products on the market today include some form of user support or, if not, a qualified expert can figure them out. When deciding whether to develop your own solution, you’ll need to factor in the cost and challenge of supporting the software once it goes live.

Return on investment (ROI). Perhaps the ultimate factor to consider in a “buy vs. build” decision is ROI. Only after making a strong and reasonable case that a custom software solution will eventually pay off in a more efficient, productive construction operation should you move ahead with the concept. Your CPA and other professional advisors can help you decide whether, and how, to proceed.

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